A2J urges new government to get priorities right and act on auto-renewals scandal

Press release: Monday 18 July 2016

Access to Justice (A2J) has called for the government to “get its priorities right” and take further action on automatic car insurance renewals which, the campaign group says, is a scandal that is costing the six million motor insurance customers who renew automatically over £700m each year.

Andrew Twambley, A2J spokesperson, said insurers were failing to put their own house in order, and instead are lobbying the government to remove the rights of ordinary people to obtain redress for injuries suffered in accidents where it wasn’t their fault.

Twambley explained the government plans to raise the small claims limit for personal injury to £5,000 and remove the right to general damages for soft tissue injuries

“The new Prime Minister and Cabinet has a good opportunity to review the previous administration’s legislative agenda and re-state some priorities. These plans are the very antithesis of One Nation government, as they benefit insurers at the expense of ordinary people.”

He said: “As long ago as 2013, Insurer activity at policy renewal stage was troubling enough to force the Treasury Select Committee to write to the FCA and ABI, yet car insurance premiums have now risen to their highest level since 2011.”

Twambley said the average premium had increased by nearly 20% during the last 12 months (Confused.com research), driven by falling insurer investment returns, and continuing losses on insurers’ motor books meant it was even more unlikely that they would hand back to customers the £50 savings per policy the government has estimated would accrue from the reforms to personal injury.

“The government is naive or deluded if it believes customers are going to get £50 knocked off their insurance premiums if these reforms go through. To date, only Aviva and LV= have publicly committed to doing so, in the official government press release. There has been a deafening silence from most of the car insurance industry.”

Twambley cited research from Compare the Market* which found that loyal customers who stay with their insurer are paying on average a loyalty tax of £119, and that the average renewal premium compared to the cheapest comparable policy on the market had risen from £96 to £119 in just 12 months. “If six million customers automatically renew, that’s a potential loss to customers of over £700m each year in favour of the insurers.”

Twambley said the Financial Conduct Authority [FCA] said in 2015 it would act to ensure insurers had to tell motorists what the cost of their previous year’s policy was at renewal. “We have written to the FCA to ask how many insurers now give this information to their customers at renewal.”

He commented: “Car insurance is the only industry we can think of where customer loyalty is rewarded by an increase in annual premiums, as opposed to a reduction. Auto-renewal is a scandal that is crying out for government intervention.”

“Instead, ministers have ducked the issue, choosing instead to “listen to the mighty” and sweep away the rights of millions of people to seek redress for soft tissue injuries caused by an accident that wasn’t their fault, at he same time holding out a very uncertain promise of £50 off the cost of premiums.”

[Source: The Times 26 June 2016]

About A2J

A2J represents the interests of the public and is supported by the broader personal injury (PI) sector. Its prime focus is to respond to the government’s proposed road traffic accident compensation reforms, as announced by Chancellor George Osborne in his November 2015 Autumn Statement.

A2J provides members with a cohesive voice to fight these proposed draconian measures; it will work with the government and other interested parties to create sensible, balanced alternatives which protect individuals’ rights, while addressing the government’s concerns, particularly in relation to claims fraud.

What the government is proposing:

In his 2015 Autumn Statement, Chancellor George Osborne announced that people making personal injury claims worth up to £5,000 would have to use the small claims court and cannot recoup the cost of any legal advice. In addition, they would no longer be able to get any cash settlement for pain and suffering caused, although they would be able to claim for physiotherapy and loss of earnings.